The Housing Bubble

WFAA reports from Texas. “This summer, we have been exploring the extraordinary things happening in North Texas real estate. But the ‘hottest market ever’ doesn’t just apply to owning. Rents — and new rental developments — are rising fast, too. We visited a 400+ unit project being erected in Frisco called Jefferson Stonebriar. Models feature more natural light and an unusually airy feeling for an apartment. In addition, they are increasingly using premium finishes. ‘Today, we have 10-, 12-, 14-foot ceilings,’ said Brad Taylor, the regional managing partner at JPI. And he says JPI is working on a project that includes apartments with even higher ceilings.”

“Taylor acknowledges that the new level of amenities fetches a new level of rent. Many of the apartment units under construction in DFW are considered ‘luxury’ developments. North Texas is a standout in apartment construction. ‘It is the number-one building center in the U.S.,’ said Greg Willet, chief economist for RealPage. He told us there are currently nearly 50,000 apartment units under construction here, which is a staggering figure. That’s is about one-in-ten of every apartment on the way across the country,’ Willet said.”

The Star Tribune in Minnesota. “Homebuilders are slowly gaining ground on apartment developers in the Twin Cities. So far this year, single-family permits are up 10.4 percent compared with the previous year, while multifamily units — mostly rental apartments — have increased only 4.4 percent, a new report from the Builders Association of the Twin Cities said. Those gains signal a major shift for housing development in the metro area. Rental apartments led the construction recovery and have dominated the industry for the past several years. But that’s changing, with demand for new single-family houses on the rise and concerns that some rental markets are on the verge of saturation.”

“But this month proved an exception to the trend because of permitting for two big apartment projects. In August, homebuilders in the 13-county metro were issued 465 permits to build 888 units. That represents a 1.6 percent increase in single-family permits and a 48 percent increase in multifamily units.”

The Denver Business Journal in Colorado. “Where is Denver’s most expensive neighborhood to rent? Right where it’s been for awhile: In the Golden Triangle neighborhood near downtown, where the median (half rent for more, half for less) monthly rent is $2,200 in August, according to apartment rental website Zumper. And prices are falling across Denver: The median price of one bedroom units fell 3.2 percent to a median of $1,200 in the city, while two bedroom units dropped 2.9 percent to $1,650, Zumper said this month.”

“That $2,200 monthly median rent in the Golden Triangle is actually down $100 from June, according to Zumper’s numbers.”

The Houston Chronicle in Texas. “The average rent for a Houston-area apartment fell in July as developers added units at the same time job growth has slowed, a new report shows. The average rent of $1,082 in July was 2.2 percent lower than the average of $1,107 a year earlier, according to research firm Axiometrics. Rents fell in 12 of the 25 local regions tracked by Axiometrics.”

“This year, 24,863 new units are expected to be completed across the Houston area and another 11,678 in 2017, according to Axiometrics. Annual job growth, meanwhile, slowed to 5,200 in June, down from a recent peak of 117,800 in 2014.”

From Hawaii News Now. “Hawaii’s hot housing market is only getting hotter. But there’s one group of renters who are faring quite well: College students. Jillian Glenn, a University of Hawaii at Manoa political science major, started her senior year on Monday. And after a month of searching for the perfect place, she and her roommates just signed the lease on a rental home. ‘I used to live on campus. I think it’s like $800 a month for not very good conditions,’ he said. ‘So for me, I’d rather pay the same price to pick the place I want with nicer conditions.’”

“College students are finding that their strength is in their numbers. Developer Peter Savio privately operates off-campus student apartments, and this is the first school year he’s seeing vacancies. He says the reason for the empty rooms is simple. ‘A dorm is more expensive. Students can actually rent a two-bedroom apartment for $1,500 and they can put four kids in it and they are each spending between $400-$500,’ Savio said.”

“Meanwhile, there’s no shortage of rooms on campus this year. University of Hawaii officials say the school was able to accommodate every student in need of a dorm. Looking ahead, it appears UH-Manoa could get even more housing competition. A developer has taken out permits to demolish a nearby shopping center to build another private high-rise dorm.”